British Airways beat second-quarter profit forecasts today but its shares fell after it warned high fuel prices and lower airfares would keep year earnings within forecasts.
Europe's second-biggest airline said profits rose due to deep cost cuts and a pick-up in air travel following last year's downturn. But it sounded a cautious tone after warning competition would continue to squeeze average revenue per passenger.
Analysts and traders were mixed on the results, saying fuel surcharges on ticket prices would keep costs under control but competition remained tough and the threat of more oil price spikes remained.
BA shares fell 2.7 per cent to 218-1/2 pence by 9:45 a.m.
The stock had fallen 3.4 per cent so far this year by Friday's close, compared to a 5.5 per cent rise in the broader market.
The airline's operating profit for the three months to end-September rose 23 per cent on the same period last year to £240 million sterling.
However, profits would have been near flat after accounting for a £40 million charge in the previous period due to a wildcat strike at London's Heathrow Airport.
Revenues for the period were £2.03 billion compared with the average forecast of £2.04 billion and with £1.98 billion made last year.
Chief executive Mr Rod Eddington said the company was sticking with guidance for 2-3 per cent revenue growth this year and echoed warnings by low-cost rival Ryanair for a tough winter.
BA, which has cut 13,000 jobs in the past three years, said total costs had improved but higher pension costs had only been partially offset by staff cuts.
BA faces stiff competition from Ryanair and easyJet on short-haul European routes. Ryanair beat first-half forecasts last week after a strong summer. BA also said October passenger traffic rose 1.8 per cent and its load factor in the same period was 74.2 per cent.